Gov. Terry E. Branstad Discusses Issues Facing the State

Podcast

Borg: A couple of months from now Iowa's General Assembly begins a new session. Everyone is wondering if it will be as contentious as the session earlier this year that went more than two months past the scheduled adjournment -- republicans and democrats in that session wrangling over budgeting and appropriation changes that newly-elected Governor Terry Branstad insists are necessary for Iowa's fiscal health. Now, the Governor is planning big changes in public schools. He is holding town hall meetings across the state getting feedback on his proposals and, of course, there's a lot more on the Governor's legislative agenda including a possible increase in the gas tax. Governor Branstad, welcome back to Iowa Press. We're going to cover those issues in a bit.

Branstad: Thank you, Dean. Thank you very much.

Borg: And across the Iowa Press table Public Radio Statehouse Reporter Jeneane Beck and Radio Iowa News Director Kay Henderson.

Henderson: Governor, a commission that you hand-picked has recommended a gas tax increase of between eight to ten cents per gallon. When will you endorse that?

Branstad: Well, I don't know that I'm going to endorse it but I do think it was appropriate for this group of citizens to take a look at what the needs are and to recognize the fact that we do have some infrastructure needs in terms of roads and bridges. The next step will be for them to make their report to the Department of Transportation and then we will look at what makes the most sense with regard to and especially looking at it in terms of the infrastructure needs for economic development. The number one issue in this state is still jobs and we need to do all we can to try to attract more businesses and jobs to the state and that will be my primary focus in this coming session of the legislature. Last year we got the state's fiscal house in order for the most part. It was not easy but we did get essentially a two-year budget with a five-year projection spending less than we're taking in. Now we need to focus on those things that can bring more good jobs to the state of Iowa including improving the education system and the infrastructure.

Henderson: Well, if the infrastructure needs repair and you need more money to do it where else do you get it than by the gas tax?

Branstad: Well, I think we need to look at the fact that everything is changing out there. We're seeing people now driving more fuel efficient vehicles. We're seeing electric vehicles. I'm told that we may see a lot of trucks moving to natural gas or LP and so we need to have a new system and I think it needs to be a pay-as-you-go basis rather than doing it with borrowed money because you can only build half as many roads if you do it that way. So, we're looking at what are the innovative changes we can make? Also, what kind of savings can we have in reducing administrative costs in the Department of Transportation and at the local level looking at ways we may be able to share resources with local governments. I would say one of the things I'm really proud of is what the DOT has done with rebuilding 680. That was wiped out because of the flooding in western Iowa. They put together a unique contract. We have private contractors working with the DOT with incentive. I'm going to be there on November 2nd, that road is going to be reopened and it was under water all summer and fall and finally emerged from the flooding a little over a month ago and in less than a month, or a little over a month, I don't know, in a very short period of time it is being rebuilt. I think that's a good example of public private cooperation and the contractors working with the state and a great example of what can be done if we work together.

Henderson: Well, one kind of question on this topic, so you would contemplate some other type of user fee for electric cars, propane propelled cars aside from the gas tax?

Branstad: Well, I think we need to look to the future and say what's going to happen in -- I think most Iowans would say there ought to be a user fee so that the people that use the highways would be the ones that would pay for the benefits of it. And also it needs to be equitable so all the vehicles pay their fair share. And that isn't an easy thing to do because we're in a position of transition but I think what we recognize is, in fact, one of the big things that is happening is Alcoa because of the move to lighter vehicles is expanding their plant in Davenport. It's going to be 180 really good jobs and that is my real focus is jobs. And I think that that is an example of the fact that we're going to have wider, more fuel efficient vehicles and we'll have to look at new roads we can provide for the highway transportation needs.

Beck: Governor, this week there was two debates held in Senate district 18, the special election involving Cindy Golding and Liz Mathis. This could decide who controls the Iowa Senate. Are you concerned with how that race is going? You've got Cindy Golding, on occasion, distancing herself from you saying she was not your chosen candidate. You have Senate republicans in fighting trying to decide who is going to control or be their majority or minority leader depending on the outcome of that race. Is that race winnable for republicans?

Branstad: I think it's winnable. Obviously the democrats have a very well-known celebrity candidate who was a TV anchor and so she has got tremendous name recognition. However, Cindy Golding is a business woman and she is focusing on things like the Right to Work law and preserving federal deductibility, critically important to jobs. Jobs is the number one issue and so I think the focus on jobs is important and I think we need obviously a fair shake in the Senate in terms of our opportunities there. But I work with whoever gets elected but I think Cindy Golding because of her business background and her understanding and her knowledge of the issues like federal deductibility, the Right to Work law, those are very important to our state and our competitiveness in attracting jobs.

Beck: Are Senate republicans doing enough in that race in your mind? That has been what some of the bickering has been about whether leadership is doing enough to win that race.

Branstad: Well, I hope so and I think there's a lot of people including Matt Strawn, the republican state chairman and House republicans as well as Senate republicans that recognize this is important. We all need to work together on it and we're very hopeful that we'll see a really great turnout for that special election.

Borg: Governor, I covered the Board of Regents this week meeting in Cedar Falls on the UNI campus who have several questions coming out of that meeting. One of them is they are considering a tuition hike, as you know, an average of 3.75% increase across the three state universities. Of course, the rhetoric always comes up when tuition is increased, the Regents say, well, the state is decreasing their share of what traditionally has been supporting state universities and we're having to shift more of that now to the students and tuition. Out of that came, Bob Downer of Iowa City, an appointee, a republican appointee on the Board of Regents, he came up with a pretty novel perspective and that was, he said that we are chasing, forcing Iowa graduates out of the state of Iowa in order to pay their ever increasing student debt because Iowa salaries just aren't what they are in New York City or Chicago and so our workforce and economic development for the future is in jeopardy because we're forcing students to go out of state in order to pay off their student debt.

Branstad: That's why I ran for Governor because I wanted to change that and I want to bring good paying jobs to Iowa and just this month it has been our best month yet in terms of creating good paying jobs. CJ announced they're going to be 180 great jobs in Fort Dodge, we've got Alcoa and just yesterday it was announced that Amana, they're closing some other plants and going to add 160 jobs in Iowa. So, we need to continue to focus on reducing the tax and regulatory burden and bringing those good jobs to Iowa so Iowa graduates have that opportunity. I also think it is important that students take responsibility as well to not borrow as much money as they can. When I went to the University of Iowa my parents weren't in the financial position to really pay for my college so I worked, I also borrowed money but I'm proud to say I never missed a payment, I paid that -- I didn't get the money paid back until I was governor but I do understand the interest and the concern that students and families have. I would also point out compared to Illinois, compared to many of our neighboring states our tuition is still a bargain compared to those states. But I am very cognoscente of the concern that students and families have about the increase. Also, this increase is modest compared to what happened when Vilsack was governor when they had 18% and 20% increases in tuition.

Henderson: Iowa's community colleges are also increasing tuition to attend at those attendant centers. There is some concern that there's so much demand for retraining that community colleges can't meet the demand. And in other states community colleges have waiting lists for people to get in to certain programs. Is there a danger in Iowa that the state isn't investing enough in community colleges and that sort of backlog waiting list situation will happen in Iowa?

Branstad: Well, unfortunately I think community colleges are doing a great job in our state and we also have dual enrollment, we have high school students that are getting college credit. I was just in Creston and I was impressed, in fact, that the town hall meetings we've been having with students, the number of students that are dual enrolling and getting job training opportunities while they are still in high school looking to the future, I think those are great. I also, one of the last things we did in the session was provide some additional money for community colleges. Our community colleges are where a lot of our students start now. We had one family from Boone that they dual enrolled while in high school and got enough credits to graduate from DMACC in Boone the same time they graduated from high school, went to Iowa State and then came to Des Moines University. Three members of the same family, the oldest one Katie Howell has now completed her residency, come back and now she is an emergency room physician at the Boone County Hospital. That's a great example of a success story and we want these graduates to have good job opportunities in Iowa. Rockwell Collins is adding some great jobs in the technical area. I'm impressed with what John Deere is doing. I've also been recently to the Bridgestone plant here, much different manufacturing jobs than we used to have and require important skills and we need to make sure the students get the educational training to prepare for those skills.

Beck: Well, Governor, as we stick with higher education for just another moment or two one of the other arguments that has been made at a couple recent Board of Regents meetings is that whether the University of Northern Iowa has the right business model. 92% of their students are Iowa students. They say that is difficult for them when the tuition reimbursement from the state or the appropriation from the state is reduced. It is harder for them to make up the difference in out-of-state students who pay a lot more in tuition. Is their business model bad?

Branstad: No, I don't think their business model is bad, I think UNI is a great school. Their graduates in accounting I think have about the highest pass ratio on the CPA exam of anybody, they have got a great business school, they've got a great education school. Now, in terms of the funding, in terms of the funding I think we need to look at the formula because you're right, they don't have as big a mix of out-of-state or foreign students as Iowa State and the University of Iowa and because of that and since they are relying more on tuition I think the state, when we look at the appropriation mix between the universities, needs to take that into consideration. So, that is something I think for the future that we do need to take into consideration when we look at Regents funding.

Borg: Do you think they ought to recruit more out-of-state because President Ben Allen has said in these very words, we have a bad business model. Former Regent Michael Gartner also advised UNI in March of this year to recruit more out-of-state students in order to stay afloat.

Branstad: Well, first of all I would say I think a lot of Iowa students choose UNI because they think it is a great school and it is a smaller school and they feel they'll get more individual attention. So, I think it's fine if they try to recruit more out-of-state students but I think the University of Northern Iowa has always been a school that does a great job of educating Iowans and a lot of them stay here and we want more of them to stay in Iowa.

Borg: But they do come up on the short end of state appropriations as compared to Iowa and Iowa State. In fact, a student leader in talking with the Regents yesterday, making a presentation used the words and cited the fact that 92% of UNI students are from Iowa and he also said we keep more UNI graduates in the state than do Iowa and Iowa State and you're agreeing with that. Then he used the words, but in state appropriations we are undervalued and unappreciated.

Branstad: Well, I think we need to change that. I think the point is that the formula has not taken into consideration that at UNI most of their students are from Iowa, they don't get the benefit of the higher out-of-state tuition and consequently I think as we look at the funding formula for the Regents in the future that needs to be taken into consideration. I'm sorry that hasn't been done in the past but I think as we look to the future that is something we can change.

Henderson: As we look to the past week Wisconsin Governor Scott Walker came to Iowa to give a speech to a private event. You defended before that event started his actions in Wisconsin with regard to collective bargaining rights for unions. Do you think he acted appropriately in Wisconsin? And do you hope to make the same sort of changes here?

Branstad: Well, first of all, their situation is different than ours and I think Scott Walker, like I, inherited a big mess. In fact, his situation was even worse than mine. They had a much bigger projected deficit and they had to make tough decisions. I think he has done the right thing and he has focused on jobs and Wisconsin is making great progress. Compare that to Illinois -- Illinois raised taxes and they are $6 billion behind on paying their bills. So, I just think that governors like Scott Walker and Kasich and the other republicans that came in in this last election recognize that we needed to do what our colleagues in New Jersey and Indiana had done and that is put the focus on jobs, reduce the size and cost of government and reduce the tax and regulatory burden to make our economies grow. And Wisconsin has had success, we're having success in Iowa in the focus on jobs and I want to see the focus on jobs.

Henderson: So, if the outcome of the 2012 election is that republicans control both the Iowa House and the Iowa Senate will you propose significant changes in Iowa's collective bargaining law?

Branstad: We're not looking at that, we're looking at things that we can do to attract more business and jobs to our state and that is our focus, reducing the commercial and corporate income tax, putting limits on property tax for all classes of property and those things that can attract more jobs. We still have 100,000 people out of work. October is going to be our best economic development month yet. We just got -- we were one of six states to get an I6 grant, 140 applicants and Iowa was one of six chosen. We got the CJ announcement, you know, great jobs in Fort Dodge. We are excited about -- and on Monday I'm going to, I've already by executive order established the Iowa Partnership of Economic Progress. These are business leaders from throughout the state we're going to partner with, the public sector in economic development. I'll name those people on Monday. So, we're very excited about it. We're going to continue to focus on jobs.

Beck: Let's talk about jobs at the state prisons. Correction workers recently have protested at both Fort Madison and Anamosa talking about unsafe conditions, in their opinion, the facilities are older, they are saying that there's not enough staffing. Do you think that they have been put in an unsafe situation?

Branstad: Well, unfortunately Governor Culver did a massive cut in January before leaving office and we have provided $25 million additional money for corrections because we can see that jeopardized public safety and health and you may recall we did a supplemental appropriation for corrections and mental health and human services during the session and then provided additional money for staffing. But we know the budget is tight -- I've also been to Fort Madison ...

Beck: Have they been able to retain as many workers as you hoped?

Branstad: Yes, I think they have been able to make significant progress and also the Lieutenant Governor and I personally went to the prison in Fort Madison and went inside the prison, got a chance to visit not only with the corrections staff but also with some of the prisoners. We also saw the new prison under construction which is going to be a safer and easier to manage facility. So, I think we've got a lot of dedicated people that are working hard to protect public safety and I personally took that as a responsibility to provide supplemental appropriation so we didn't jeopardize health and safety and we appreciate the work that is going on to protect it. And this is $25 million more than was available in the previous administration. So, I think we've made significant progress.

Henderson: Republicans in this state are being quoted by presidential candidates, some of whom are proposing flatter or a flat out flat tax in income at the federal level. If that happens are you prepared as Governor to propose a flat tax at the state level?

Branstad: Well, we have already reduced the corporate and individual income tax in Iowa. Actually I want to make more progress on that in the future and I think it makes a lot of sense to be as competitive as possible. And a lot of people are very concerned about the federal tax structure being too convoluted and too complicated and we need to try to simplify it I think for all of our citizens and make our nation more competitive. What really concerns me is the federal corporate tax which is among the highest in the world and when I was Governor before we got a lot of Canadian companies to move here, six automotive component parts manufacturers, Ipsco Steel, Skyjack but I've had, I had a company in Chicago tell me we're thinking of moving to Canada because Canada now they have got their financial house in order, the Canadian dollar is on par with the American dollar where it used to be 65 cents to what we have and now their corporate income tax is 18%, it's going to 15% next year so they're saying, unless the federal government reduces the burdensome federal tax and the penalties for bringing the privates back to America we may move there. So, that needs to happen at the national level.

Borg: We're a long ways from a nominee but do some of these income, personal income tax proposals by some of the republican candidates concern you?

Branstad: Well, I guess I am concerned about what Obama has done to our country. We can not afford to have increases in the federal debt by $1.3, $1.4 trillion a year. We're becoming a debtor nation and that has great concern because that means future generations are going to be loaded with debt and higher taxes and it's going to stifle the American opportunity, the American dream and the opportunity ...

Borg: But the candidates don't concern you?

Branstad: Well, I think each of the candidates has their own plan and I'm going to actually be a moderator on a debate they're going to have focusing on jobs and I like the idea of reducing the regulatory and tax burden. The other thing is the regulatory burden, Obama's healthcare is unsustainable, what the EPA is doing, what Dodd-Frank is doing to the financial institutions. Our community banks in Iowa were not part of the problem and yet they are being, they are being burdened down with all kinds of regulations and costs which are making it more difficult then for making loans and to help us create jobs.

Beck: Governor, you expressed your concerns about the national and federal debt and one of the things that is happening is the super committee is looking at ways to reduce that. What is likely to come out of it is reductions in Medicaid and Medicare which has a significant impact on the state budget and I know your budget director is talking about trying to prepare for that. Are you concerned that Iowa will see substantially less funding for those programs? And how do you trim them? Any proposals you had last session to trim them a lot of them went by the wayside when they weren't popular.

Branstad: Well, actually we made some significant progress. Remember the year before they used $540 million of one-time money to plug the hole in Medicaid. I said I wanted it sustainable, I wanted to use ongoing revenue to pay for it. We did that and we made some reforms and changes. I think Chuck Palmer is doing a great job managing the situation. But you're right, the cost of Medicaid in the state when I left office was less than 12% of the budget. It is now 16% and that is why we've got this initiative to be the healthiest state in the nation. We've got to get people to take ownership of their own health and we've got to do all we can to reduce the ...

Beck: We're not going to get healthy fast enough ...

Branstad: Well, we've got to work at it and we've got to get people to buy into it, people need to have some skin in the game ...

Beck: What is the immediate preparation on the state level?

Branstad: The other thing is 2014 add another 100,000 people to the Medicaid rules under Obama's healthcare, we can't afford that. So, we're looking at can we get some kind of a significant waiver and take an Iowa approach towards this? And so we're doing some discussion in looking at how can we collaborate with the medical schools, the healthcare systems in Iowa, Mercy system, the Iowa Health system, University of Iowa Hospitals and Clinics and how can we all work together because Iowa has a tradition in history of lower healthcare costs than those in the rest of the country but we're going to need a waiver from the federal government ...

Beck: When you say waiver would that mean that you'd like to provide less services than there are currently mandated by the federal government? Or there are certain benefits you think aren't necessary?

Branstad: We think the federal system is too complicated and convoluted and drives up costs and we think there are better and more efficient ways to do things. We'd like to have the flexibility to do that just as we did welfare reform when I was governor before. We'd like to do substantial reform in the Medicaid system. And I think some of the things we're doing through the healthiest state imitative is an example of where we can incentivize people for doing the right things, exercise, nutrition and not doing risky things like using tobacco products.

Borg: We've got way too many questions and too little time here and we're getting to the end of the program. As I introduced you I said that you're criss-crossing the state getting ideas and promoting and expanding your education reform. Two weeks ago on this program we had representatives from the ISE, the teacher's union and the school boards, the IASB and both of them said, yes, we've read this, we understand it, there are some things that we can't buy into. What are you hearing around the state? Are you getting some pushback? And the question really is are you prepared because you have said what I'm proposing isn't set in concrete yet -- are you prepared to modify your proposals depending on what you have heard?

Branstad: The answer is yes. First of all, we have tried to go about this -- this is systemic, significant reform that is designed to make Iowa's education system competitive to we prepare our young people for the jobs of the future in this world economy. And we are getting input and ideas ...

Borg: What is going to change?

Branstad: Well, we haven't decided for sure yet and we also need to put a budget to support and I won't know until December what the December revenue estimate is, I have to base the budget on that. So, we will make recommendations based on that. We look at this as kind of a long range plan and something we need to stick with for the long-term. I have a ten-year plan to get Iowa from low in the pack to best in America in education and world class ...

Borg: Where are you getting this pushback?

Branstad: Well, it's interesting -- what we're finding ...

Borg: I'm sure it is ...

Branstad: Well, first of all, most people are saying we like the idea, we think we need systemic change, we think the focus on having a great teacher in every classroom and a great principal in every building makes sense, we want to set higher standards for our students. We need to have -- this is where we find a lot of support -- the idea of having a new assessment system so we can measure the progress of students and encourage innovation in our schools ...

Borg: Let me ask it this way -- what is going to be the toughest sell?

Branstad: Well, it's hard to say, I mean, because different -- generally we're hearing good things about it but when you're trying to do systemic reform it's just like when we reformed the, reorganized state government, we had what we call the yes butters, oh yes this is a great idea but as it affects me -- accountability I think is one of the biggest challenges but we need accountability to make sure that we have a great teacher in every classroom.

Henderson: You said you won't know the price tag until December, basically until you know how much money you have to spend. That seems an odd way to calculate how to affect education reform. Shouldn't you decide you need to do this and then decide how much it costs?

Branstad: Well, yes, and I think really that cost is going to determine how many years it is going to take to phase it in. We know this is something that you can't do overnight and it's going to need to be thoughtful and systematic and done over a period of time. But we also want to make sure that where we're redirecting some of the resources -- we're spending 58% of the state budget in education and we want to redirect some of those resources to make sure that we're doing as much as we can. One of the areas we have talked about is healthcare. If we can do a statewide contract in terms of providing healthcare and we really get everybody on board for that we may be able to save a huge amount of money that could then be redirected into education.

Henderson: So, is it all going to be savings or do you think there is an appetite among republicans in your party to spend more on education?

Branstad: Well, I think if they can see we're going to get results -- people don't want to just throw more money at the old system, they want a new systemic reform and change and they're willing, I think, to invest in that if they can see that it's going to get us results and truly make Iowa students prepared for the jobs of the future. The focus needs to be on jobs and making sure that we can prepare our students for the job opportunities.

Borg: Quick question.

Beck: I was just going to say, teachers will complain that this isn't systemic change, that the first three quarters of the document is about teacher reform and pay reform. Is that really largely what this is about more than systemic reform?

Branstad: Everybody agrees that the most important thing for quality education is have a great teacher and we want to have a great teacher in every classroom in the state of Iowa.

Borg: Thank you, Governor. Thank you very much for being with us today. On our next edition of Iowa Press we're talking with former governor, now U.S. Secretary of Agriculture Tom Vilsack. He is also spending a lot of time in Iowa traveling across the nation to campaign for President Obama's jobs legislation. Tom Vilsack at the usual Iowa Press times next week, 7:30 Friday night and 11:30 Sunday morning. A reminder too the Internet your direct connection to our Iowa Press staff. The e-mail address is a the bottom of the screen, it's iowapress@iptv.org. I'm Dean Borg. Thanks for joining us today.

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